AMENDMENT NO. 1
to Amendment to Custody Agreement between
The Chase Manhattan Bank and
Xxxxxx Xxxxxxx Xxxx Xxxxxx Institutional Fund, Inc.
WHEREAS, Xxxxxx Xxxxxxx Trust Company entered into a Custody Agreement
dated as of July 31, 1989, as amended by an Amendment to Custody Agreement
dated as of April 22, 1996 (the "Securities Lending Amendment, and,
collectively with the Custody Agreement, the "Agreement") with Xxxxxx Xxxxxxx
Xxxx Xxxxxx Institutional Fund, Inc. (the "Client"); and
WHEREAS, the Agreement was assigned by Xxxxxx Xxxxxxx Trust Company to
The Chase Manhattan Bank (the "Custodian") by letter of August 31, 1998; and
WHEREAS, the Client and the Custodian have agreed to enter into this
Amendment in order to authorize the Custodian to take certain additional
actions on behalf of the Client;
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
1. Terms used in the Agreement are used herein with their defined
meanings.
2. Sections 3 and 4 of the Securities Lending Amendment are hereby
deleted and a new provision with respect to the matters covered by such
Sections shall be considered part of the Agreement as follows:
"For each loan of Securities, the Custodian or a financial institution
with which Custodian shall have previously entered an agreement among itself,
such financial institution and a particular borrower providing for the
holding of collateral at such financial institution on behalf of Custodian's
lending customers (a "Triparty Institution") shall receive and hold all
collateral required by the applicable Securities Loan Agreement
("Collateral") in an account established solely for that purpose (the
"Collateral Account"), and the Custodian is hereby authorized and directed,
without obtaining any further approval from Client, to invest and reinvest
substantially all cash Collateral in accordance with the investment
guidelines annexed hereto. Except as contemplated by Custodian's fee
schedule with respect to Custodian's participation in negative earnings on
cash Collateral investments, such investments ("Authorized Investments") are
made for the account of, and at the sole risk of, Client. In that connection,
Client shall pay to
Custodian on demand in cash an amount equal to any deficiency in the amount
of Collateral available for return to a borrower pursuant to the applicable
Securities Loan Agreement. Custodian is authorized to select brokers and
dealers for the execution of trades in connection with the investment of cash
Collateral, which broker or dealer may be an affiliate of Custodian provided
that a competitive execution price is obtained. Custodian shall credit, or
where applicable have a Triparty Institution credit, all Collateral,
Authorized Investments and proceeds to a Collateral Account and Custodian
shall xxxx its books and records to identify Clients' interest therein, it
being understood, however, that all monies credited to a Collateral Account
may for purposes of investment be commingled with cash collateral held for
other lenders of securities on whose behalf Custodian may act. Custodian may,
in its sole discretion, liquidate any Authorized Investment and credit the
net proceeds to a Collateral Account. Custodian shall accept substitutions of
Collateral in accordance with the applicable Securities Loan Agreement, and
shall credit, or where applicable shall have a triparty institution credit,
all such substitutions to a Collateral Account."
3. The following new Section is hereby made a part of the Agreement:
INDEMNIFICATION
(a) INDEMNIFICATION OF CLIENT IN RESPECT OF ALL INTEREST, DIVIDENDS AND
OTHER DISTRIBUTIONS MADE BY THE ISSUER ("DISTRIBUTIONS").
(i) NON-CASH DISTRIBUTIONS. If the borrower in respect of any loan of
Securities effected pursuant hereto and pursuant to the applicable Securities
Loan Agreement (a "Loan") fails to deliver any non-cash Distributions with
respect to Securities on Loan as and when requested to do so by Custodian,
(x) Custodian shall, with respect to Securities issued by an issuer that is
organized under the laws of the United States or any State thereof or that
are otherwise traded in the United States ("U.S. Securities"), at its option,
credit such non-cash Distribution or an amount equivalent thereto to Client's
account on the date it is due, or (y) with respect to Securities issued by an
issuer that is not organized under the laws of the United States ("Foreign
Securities"), for any non-cash Distributions for which the record date occurs
on or before the date of any event of default as described in the Securities
Loan Agreement (an "Event of Default"), Custodian shall, at its option,
either (i) purchase replacement securities (of an equal amount or the same
issue, class, type or series as the Distribution) on the principal market in
which such securities are traded or (ii) credit Client's account, with the
market value in U.S. dollars ("Dollars") of such Distributions on the due
date as determined by Custodian in good faith.
(ii) CASH DISTRIBUTIONS. Custodian shall credit Client's account on
payable date with the amount of all cash Distributions with respect to
Securities on Loan over their record date that Client would have received
under the Agreement had such Securities not been on Loan over record date;
provided, that with respect to Foreign Securities, Custodian's obligation to
credit Client's account shall extend only to record dates up to and
including the date of any Event of Default (as defined in the applicable
Securities Loan Agreement). To the extent that cash Distributions are not
delivered to Custodian by borrower and Custodian has so credited Client's
account with such Distributions, Custodian shall be subrogated to Client's
rights against borrower as provided in paragraph (c) hereof. In connection
with the foregoing, Client shall promptly return any amount so credited upon
oral or written notification from Custodian: (a) that such amount has not
been paid by the issuer of the Securities or the paying agent therefor (as
applicable) in the ordinary course of business or (b) that such amount was
incorrectly credited. If Client does not promptly return any amount upon such
notification, Custodian shall be entitled, upon oral or written notification
to Client, to reverse such credit by debiting Client's account for the amount
previously credited.
(b) INDEMNIFICATION OF CLIENT IN RESPECT OF SECURITIES
(i) U.S. SECURITIES. If the borrower in respect of any Loan of U.S.
Securities effected pursuant hereto and pursuant to the applicable Securities
Loan Agreement fails to return any Securities on Loan to Custodian for the
Account when due thereunder, which is the date an Event of Default shall have
occurred under the applicable Securities Loan Agreement (the "Return Date"),
then Custodian shall, at its expense (subject to paragraph (d) hereof) deposit
replacement Securities of the same issue, type, class and series to the
Account, as soon as practicable. If Custodian is unable to obtain replacement
Securities, Custodian shall credit Client's account in Dollars with the
market value of such loaned Securities on the credit date (including, in the
case of debt Securities, accrued interest up to and including the credit
date).
(ii) FOREIGN SECURITIES. If the borrower in respect of any Loan of
Foreign Securities effected pursuant hereto and pursuant to the applicable
Securities Loan Agreement fails to return any Securities on Loan to Custodian
for the Account on the Return Date, Custodian will, at Custodian's sole
election and at its expense (subject to paragraphs (b)(iii) and (c) hereof),
as soon as practicable, either (x) deposit replacement Securities of the same
issue, type, class and series to the Account or (y) credit Client's Account,
in Dollars with the market value of the Collateral as determined as of the
Return Date (up to but not to exceed the market value of the Loaned
Securities as of the Return Date); provided, however, that if the market
value of the Collateral as of the Return Date is less than the market value
of the Loaned Securities as of the Return Date (other than as a consequence
of losses on Authorized Investments as provided in paragraph (b)(iii)
following), Custodian will credit Client's Account with such further amount
as shall account for the difference between the market value of the
Collateral and the market value of the Loaned Securities as of the Return
Date. For purposes of this Section, market value in the case of fixed income
Securities shall include accrued but unpaid interest. Market value shall be
determined by Custodian in accordance with the applicable Securities Loan
Agreement, including the computation of Dollar equivalents where Securities
on Loan and/or Collateral (and interest, dividends and other payments and
Distributions received by Chase in connection with such Securities on Loan
and/or Collateral) are denominated in a currency other than Dollars.
(iii) In connection with (i) and (ii) above, if the market value of the
Cash Collateral at the time of default by the borrower on a credit date or a
Return Date is less than that which is required to purchase replacement
securities or to credit the Client's account with the market value in Dollars
of the Loaned Securities as a result of a decrease in the market value of
Authorized Investments, Custodian shall not be responsible for that decrease
and shall deposit replacement securities or credit Client's account, with the
market value of such Loaned Securities only to an amount net of the decrease
in market value of Authorized Investments. With respect to and to the extent
that a Loan is made against letter of credit Collateral, in the event of a
default by both the issuer of the letter of credit and the borrower,
Custodian shall not be responsible for any resulting decrease in the market
value of such letter of credit Collateral or have any obligation to either
contribute to or otherwise provide for any resulting Collateral deficiency.
(c) SUBROGATION. If Custodian makes a payment or a purchase pursuant to
Sections (a) or (b) hereof, Custodian shall, to the extent of such payment or
purchase, be subrogated to, and Client shall assign and be deemed to have
assigned to Custodian, all of its rights in, to and against the borrower (and
any guarantor thereof) in respect of such Loan, any Collateral pledged by the
borrower in respect of such Loan (including any Letters of Credit and the
issuers thereof), and all proceeds of such Collateral. In the event that
Client receives or is credited with any payment, benefit or value from or on
behalf of the borrower in respect of rights to which Custodian is subrogated
as provided herein, Client shall promptly remit or pay to Custodian the same
(or its Dollar equivalent).
In all other respects, all terms and provisions of the Agreement remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to be duly executed and delivered by their respective authorized officers as
of the day and year first above written.
THE CHASE MANHATTAN BANK
By /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx, Vice President
XXXXXX XXXXXXX XXXX XXXXXX INSTITUTIONAL FUND, INC.
216864 By /s/ Xxxxxxx X. Xxxxx
CHASE GLOBAL SECURITIES LENDING
INVESTMENT GUIDELINES FOR
XXXXXX XXXXXXX XXXX XXXXXX INSTITUTIONAL FUND, INC.
EFFECTIVE MAY 10, 1999
A. ACCOUNT OBJECTIVE
Pursuant to Amendment No.1 to Amendment to Custody Agreement between
The Chase Manhattan Bank ("Chase") and Xxxxxx Xxxxxxx Xxxx Xxxxxx
Institutional Fund, Inc. (the "Fund") dated May 10, 1999, Chase has
undertaken to invest and reinvest cash collateral received in
connection with securities lending ("Collateral") in accordance with
the following investment guidelines.
This short term, fixed income account (the "Account"), established on
behalf of the Fund, is designed to maximize the yield on securities
lending cash collateral by investing in securities that satisfy these
guidelines, as applied at the time of purchase.
B. PERMISSIBLE INVESTMENTS
1. INSTRUMENTS
Chase on behalf of the Account is permitted to purchase only the
following securities:
Bankers' Acceptances
Domestic and Yankee Certificates of Deposit
Commercial Paper, including unregistered (so-called 4(2)) Commercial
Paper, but excluding Asset-backed commercial paper)
Corporate Bonds
Medium Term Notes
Repurchase Agreements, subject to the requirements of paragraph G
Time Deposits
U.S. Treasury Bills
U.S. Treasury Notes
U.S. Government Agency Discount Notes and Debentures, which shall
include securities issued or guaranteed as to principal and interest
by the United States Government, its agencies instrumentalities or
establishments
2. CERTAIN DERIVATIVES
Chase, on behalf of the Account, will not invest in any instrument
whose coupon rate will move in the opposite direction of the index to
which such instrument is tied. In addition,
in the event that Chase, on behalf of the Account, invests in any
instrument whose coupon rate moves when the index to which such rate
is tied moves, Chase, on behalf of the Account, shall invest only in
those of such instruments whose movements in the coupon rate are
equivalent to movements in the index, with such index or indices being
limited to U.S. Treasury securities, US $ LIBOR, the U.S. Federal
Funds rate or U.S. Prime Rate.
3. CURRENCY
Only U.S. Dollar denominated securities will be permissible under
these guidelines.
4. LIMITATION ON FOREIGN ISSUERS
Subject to Sections B.4 and E, there are no limitations on securities
of foreign issuers.
C. PROHIBITED INVESTMENTS
Equity securities.
Floating rate securities with an interest rate cap, with the exception
of those U.S. Government Securities and Governmental Agencies which are
capped at a rate in excess of 20% to comply with state usury laws.
D. LIMITATIONS ON AMOUNTS INVESTED/CASH RESERVE; PERMITTED BORROWING
Chase, on behalf of the Account, will seek to be fully invested in
permissible securities as of the close of business on each day.
E. CONCENTRATION GUIDELINES
- U.S. Treasury and U.S. Government Agency Securities = No Limit
- Repurchase Agreements = 20% per counterparty (see Attachment 1 to
the guidelines) to the extent they are in
compliance with Section G.
- All Other Permissible Investments = 3% of the account value at the
time of purchase, per issuer.
F. MATURITY GUIDELINES
- Time Deposits = Overnight Only. However, on occasion
where affected by legal holiday or with
the prior consent of MSDWIM, Chase, on
behalf of the Account, may purchase time
deposits with a maximum maturity not to
exceed 4 business days.
- Term Repurchase Agreements = No Greater than 7 days
- All other instruments must have a Final Maturity at the time of
purchase that does not exceed 397 days
Final Maturity, for purposes of these guidelines, means the earliest of
(i) the date noted on the face of the instrument as the date on which
the principal amount must be paid, (ii) in the case of an instrument
with an unconditional put or unconditional demand feature, the date on
which the principal amount of the instrument can be recovered by
demand, or (iii) in the case of a variable rate instrument, the
principal amount of which, in accordance with its terms, must
unconditionally be paid in 397 calendar days or less shall be deemed to
have a maturity equal to the earlier of the period remaining until the
next readjustment of the interest rate or the period remaining until
the principal amount can be recovered through demand, (iv) in the case
of a variable rate instrument, the principal amount of which is
scheduled to be paid in more than 397 calendar days, that is subject to
a demand feature, shall be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand, (v) a floating rate security, the principal
amount of which, in accordance with its terms, must unconditionally be
paid in 397 calendar days or less shall be deemed to have a maturity of
one day, (vi) a floating rate security, the principal amount of which
is scheduled to be paid in more than 397 calendar days, that is subject
to a demand feature, shall be deemed to have a maturity equal to the
period remaining until the principal amount can be recovered through
demand.
- A repurchase agreement shall be deemed to have a maturity equal to the
period remaining until the date on which the repurchase of the
underlying securities is scheduled to occur, or, where no date is
specified, but the agreement is subject to a demand, the notice period
applicable to a demand for the repurchase of the securities.
The maximum weighted average days to maturity, for all investments made
by Chase on behalf of the Account, may not exceed 90 days.
G. REPURCHASE AGREEMENTS (including term repurchase agreements, entered
into using custodians deemed appropriate by the Lender's Agent)
PERMITTED COUNTERPARTIES
Repurchase agreements shall be entered into only with counterparties
approved by the Fund's Board of Directors, as such list shall be
amended from time to time.
PERMITTED COLLATERAL
The counterparty in a repurchase transaction shall post collateral
equal to 102% of the purchase price with collateral to consist of
bills, bonds or notes issued by the United States Treasury; other
securities guaranteed as to principal and interest by the Government of
the United States, its agencies, instrumentalities or establishments;
or mortgage-backed securities issued or guaranteed by agencies of the
Government of the United States and will be required to be marked to
market on a daily basis.
DIVERSIFICATION
A repurchase agreement, as described in this Section G, shall be deemed
to be an acquisition of the underlying securities, provided that the
obligation of the seller to repurchase the securities from the Fund is
fully collateralized.
H. QUALITY GUIDELINES
Except as otherwise provided with respect to repurchase agreement
collateral in paragraph G:
Specified rating categories at time of purchase:
SHORT TERM:
Either A-1 by S & P or P-1 by Xxxxx'x and one of the following and one
of the following; A-1 by S&P, P-1 by Xxxxx'x, F-1 by Fitch or D-1 by
Duff and Xxxxxx.
DOWNGRADES
The Fund may not purchase securities based on an S&P, Moody's, Fitch,
or Duff rating where the rating organization has announced publicly
that it is examining the rating for a possible downgrade. This
limitation does not apply to securities rated A1+ by S&P.
In the event that a security held in the portfolio falls below the
minimum guideline as detailed in this paragraph H as a result of being
downgraded by S&P, Moody's, Fitch, or Duff, Chase will notify the
client and await instructions. In no event, however, will Chase be
liable for any consequences of the fallen rating, including retention
of the security in the absence of instructions from the client.
I. TRANSACTION EXECUTION
When implementing these guidelines Chase will at all times seek the
best execution for purchases and sales of securities. Chase shall not
execute transactions on behalf of the Account with or through Xxxxx,
Xxxxxx Xxxxxxx & Co. Incorporated or Xxxx Xxxxxx Xxxxxxxx Co. acting as
agent or principal.
* * *
EACH CLIENT SHOULD ANALYZE THESE GUIDELINES CONTINUALLY TO DETERMINE THEIR
CONTINUED APPROPRIATENESS, RECOGNIZING THAT ALL INVESTMENTS BEAR RISKS AND THAT
THE RETURN OF PRINCIPAL IS NOT ASSURED.
XXXXXX XXXXXXX XXXX XXXXXX THE CHASE MANHATTAN BANK
INSTITUTIONAL FUND, INC.
By: /s/ Xxxxxxx Xxxxx By: /s/ Xxxx Xxxxxxx
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Print Name: Xxxxxxx Xxxxx Print Name: Xxxx Xxxxxxx, Vice President
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DATE: May 10, 1999 DATE: May 12, 1999
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XXXXXX XXXXXXX XXXX XXXXXX
INVESTMENT MANAGEMENT INC.
BY: /s/ Xxxxxxx Xxxxx
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PRINT NAME: Xxxxxxx Xxxxx
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DATE: May 10, 1999
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